California workers’ layoffs continue, and Congress isn’t acting. How can the state help?
Hits just keep coming for hospitality workers like Lisa Cavanaugh.
Seven months after she was furloughed from her three-decade job as a server at the Sacramento International Airport, Cavanaugh got word a few weeks ago that her layoff has become permanent.
She said her union is negotiating with her employer to bring her back, but there’s no guarantee that the company will agree to the term. Gov. Gavin Newsom in September vetoed a bill that would have required hospitality companies to first rehire people they laid off.
Now, she’s living on $405 a week in unemployment insurance that may run out in a few months, with no assurance that she can return to her job or find another.
“It’s a constant mental torture,” she said. “I try not to think about it a lot, because if I think about it, I’ll have health issues.”
With the pandemic raging on for months, parts of the economy have recovered, but the lives of many working-class Californians have not.
The stock market is booming, with the Dow Jones Industrial Average recently hitting 30,000. The country’s billionaires gained a combined $1 trillion since the pandemic. Yet, in the week ending Nov. 21, more than 167,000 Californians filed for unemployment insurance for the first time. The state’s unemployment rate stands at 9%, well below the peak seen in the spring but still far above pre-pandemic numbers.
Mass layoffs are still coming. Just this week, Walt Disney Co. said it will lay off 4,000 more workers at its theme parks in California and Florida by the end of March, after the company let go 28,000 employees this fall.
Yet many lifelines for workers are set to expire by the end of the year. An eviction crisis looms as the state’s moratorium ends Feb. 1, with many tenants on the hook for rent they missed.
State legislators say that without help from the federal government, California is limited in what it can do. The state can’t run a deficit, and finding another source of revenue is a challenge. While acknowledging those issues, workers and advocates are urging the legislators to think boldly and creatively.
“(Gov. Gavin) Newsom may not want an increase in taxes,” said Jessica Bartholow, a policy advocate at the Western Center on Law and Poverty. “But he also doesn’t want homelessness. He doesn’t want children to go hungry. Those things are the status quo. The question is: Which do you want less?”
Where California’s budget stands
As Newsom prepares the budget he will propose in January, he says he is working with the Legislature on a relief package,” such as waiving fees for businesses heavily hit such as restaurants and hair salons, accelerating funding for infrastructure, and promoting work-sharing plans to avert layoffs.
On Monday he announced several initiatives, including a $500 million in grants for small businesses and non-profits and a sales-tax deferral.
The state in recent weeks got positive news from the Legislative Analyst’s Office, which said California could see $26 billion in one-time surplus funds because of higher-than-expected tax revenue from high-wage earners who are continuing to prosper.
But the LAO also warned the state could face long-term deficits rising to $17 billion by 2024. The state’s voters in November were skittish about raising taxes, defeating Proposition 15, which would have increased property taxes for bigger businesses.
1.5 million jobs lost
Despite some recovery, California has still lost 1.5 million jobs compared to February, according to a recent analysis by Beacon Economics.
Even if California adds job at the same rate as it did in October — which may not happen as the state again tightens its restriction amid surging coronavirus numbers — it would take more than 10 months for the state’s job market to return to pre-pandemic numbers.
“We have a very big hole, and if you look at the next three, four months, things look bleak when it comes to COVID,” said Taner Osman, research manager at Beacon Economics.
The state’s hospitality industry has especially been hard hit, losing more than half a million jobs over the last year.
Zachary Anderson had worked as a server for nearly a decade at Terranea Resort in Southern California. But he has been out of work since February.
Anderson said he’s looking for jobs he can work remotely, but said the pay for those is low. His unemployment insurance has run out.
“I’ve been looking for work, but there’s no certainty at this point,” he said. “There’s a lot of anxiety.”
Advocates call for more revenue
State legislators in July pitched a $100 billion stimulus plan, which would have included borrowing federal dollars for unemployment insurance benefits and expanding earned income tax credit for low-income workers. Much of the plan, however, didn’t materialize as the session came to an end.
Legislators are now counting on the new Biden administration for help.
“If the goal is to help Californians, let’s give help directly to Californians,” said Assemblyman Ash Kalra, D-San Jose. “We can’t print money, but by getting federal assistance, it helps us from making deeper cuts.”
Policy advocates said they recognize the legislators’ challenge. But the state needs to find its own ways to address its inequity, they said.
“Right now, state leaders are operating as if there will be a significant federal money coming in, and that remains very uncertain,” said Chris Hoene, executive director at the California Budget and Policy Center.
The state can already work to help those not covered by the federal assistance, such as undocumented immigrants, who got $500 per adult from the state in May but not much more, Hoene said. He also said the state needs to look seriously at finding revenue, whether by taxing the wealthy or reducing the amount of tax breaks given to corporations.
Newsom has said he doesn’t support proposals to raise taxes on millionaires, saying “now is not the time.” The state already relies heavily on taxing the rich. But the wealth disparity has gotten even wider during the pandemic, Bartholow said.
“We don’t get out of this very dangerous high inequality,” she said, “unless we have real means for investment. And we can’t do that without raising revenue.”
This story was originally published December 6, 2020 at 5:00 AM.
